A lot of professionals working their way up the corporate ladder have had the same thought at some point: I’d love to own a business – someday.
If you’re ready to make that “someday” happen now, there’s more than one way to get there. While many people instinctively think about starting from scratch, buying an existing business can be a far more strategic route into ownership.
Acquiring a business allows you to step into an operation with established revenue, a proven model, and an existing customer base. It removes much of the uncertainty that comes with launching a startup. The trade-off, of course, is that you’ll need to finance the purchase. The key point many first-time buyers miss is that this doesn’t have to come entirely from your own savings – in fact, it rarely does.
With the right structure, much of the purchase price can be funded through external financing. In this guide, we’ll walk through how business acquisition financing works in the US, the role of SBA loans, and how to structure a deal that works both on paper and in practice.
How do you finance buying a business in the US?
You don’t need to have millions in liquid cash to acquire a business. What you need is a well-prepared plan, a viable target, and access to the right financing partners. In the US market, there are several common funding routes. Let’s break them down.
Debt financing
This is the most traditional route. A bank or commercial lender provides a loan to fund the acquisition, which you repay over time with interest. The strength of your application will depend on the financial performance of the business you’re buying, your experience, and your ability to demonstrate repayment capacity.
In most cases, lenders will expect you to contribute some equity – often around 10–20% – while financing the remainder.
Equity investment
The ‘Dragons Den’ model. Instead of borrowing, you can bring in investors who provide capital in exchange for a share of the business. This reduces the pressure of monthly repayments, which can be helpful in the early stages, but it also means giving up a portion of ownership and future profits.
Hybrid structures
Many acquisitions use a combination of debt and equity. For example, part of the funding may come from a loan, with an additional portion from investors who may have the option to convert their investment into equity later. These structures can be effective but usually require legal guidance to structure correctly.
Seller financing
Seller financing is particularly common in US small business transactions. In this structure, the seller agrees to receive part of the purchase price over time, typically from the business’s future cash flow. This reduces the upfront capital required and can signal confidence from the seller, but it also creates an ongoing obligation that needs to be factored into your cash flow planning.
In many cases, buyers combine several of these methods. For example, an SBA loan might cover the majority of the purchase, with a smaller equity contribution and a seller note bridging the gap.
The role of SBA loans in business acquisition
For many US buyers, Small Business Administration (SBA) loans are the most important financing tool available.
The SBA does not lend directly. Instead, it guarantees a portion of the loan issued by approved lenders. This reduces risk for banks and allows them to offer more favorable terms than conventional financing. SBA 7(a) loans are the most commonly used for business acquisitions, which typically offer:
- Lower down payments than conventional loans
- Longer repayment terms, often up to 10 years for acquisitions
- No balloon payments
- Competitive interest rates
However, recent updates have made it essential to understand the rules before applying.
Key updates to SBA loans in 2026
As of June 1, 2025, new equity injection requirements have changed how much buyers need to contribute upfront.
For most business acquisitions, borrowers must now provide a minimum 10% equity injection based on total project costs – not just the purchase price. This includes working capital, fees, and any additional investments required to operate the business.
Seller financing can count toward this requirement, but only under strict conditions. The seller note must be on full standby for the life of the loan and typically cannot exceed 50% of the required equity contribution.
There are also stricter rules around ownership and borrower eligibility. SBA loans are generally limited to US citizens and certain eligible residents, which has narrowed access compared to previous years. Other notable considerations include a maximum loan size of $5 million, p ersonal guarantees required for owners with 20% or more equity, and m ore detailed documentation and underwriting compared to conventional loans.
Despite these requirements, SBA loans remain one of the most accessible and cost-effective ways to finance a business purchase in the US.
Where do you find lenders?
Most major US banks have dedicated SBA lending divisions, including Wells Fargo, Chase, and Bank of America. These institutions have the scale and experience to process SBA-backed deals efficiently.
Credit unions can also be strong partners, particularly for buyers seeking a more relationship-driven approach. They often have deeper knowledge of local markets and may be more flexible in underwriting.
Beyond traditional lenders, buyers can connect with investors through platforms like AngelList or by networking on LinkedIn using terms such as “search fund,” “acquisition entrepreneur,” or “private investor.”
If navigating lenders feels overwhelming, working with a loan broker or SBA specialist can significantly improve your chances. They can help structure your application, ensure compliance with SBA requirements, and introduce you to lenders who are actively funding acquisitions.
Tip: For a deeper dive into the role brokers play during acquisitions, read our article Do I need to use a business broker to buy a business in the US? 2026
What does a strong financing deal look like?
A good deal is not just about securing funding – it’s about ensuring the business can comfortably support that funding over time. At a minimum, your financing structure should include:
- A manageable equity contribution that leaves you with sufficient working capital after closing. It’s easy to underestimate how much cash you’ll need to operate the business day to day.
- Realistic repayment terms based on conservative projections. Your model should account for potential downturns, not just best-case scenarios.
- Clear and transparent loan terms, particularly around collateral, default provisions, and repayment schedules.
Ideally, you should also avoid excessive reliance on personal guarantees or personal assets where possible. While SBA loans do require guarantees, structuring the deal to minimize personal risk is still an important consideration.
Common mistakes buyers make
One of the most frequent mistakes is underestimating working capital requirements. After closing, you’ll still need to cover payroll, rent, suppliers, and other operating costs. Without sufficient liquidity, even a profitable business can quickly run into trouble.
Another common issue is focusing too heavily on the asking price rather than the business’s ability to generate cash flow. The price is negotiable – cash flow is not. Your primary question should always be whether the business can comfortably service its debt.
Buyers should also be cautious about over-leveraging or accepting the first financing offer they receive. There are always multiple lenders in the market, and terms can vary significantly.
What do lenders look for?
Lenders and investors are ultimately assessing risk. They want to see that the business is stable and that you are capable of running it successfully.
Key factors include:
- A strong track record of financial performance
- Clear, well-documented financial statements
- Relevant experience or a credible plan to manage the business
- A detailed business plan outlining how the loan will be repaid
This is one reason franchised businesses often perform well in lending scenarios. Their established systems, brand recognition, and historical performance reduce perceived risk.
Tip: For a deeper dive into how to build a strong business plan, read our article How to Write a Great Business Plan in 8 Steps.
Moving from idea to ownership
Buying a business can feel like a significant step, but with the right financing strategy, it’s far more achievable than many people expect.
SBA loans have made business ownership accessible to a broader range of buyers, even with the updated equity requirements. Combined with seller financing, equity partners, and careful planning, they provide a clear pathway into acquisition.
The key is to stay focused on fundamentals: understand the numbers, structure your deal carefully, and work with experienced partners who can guide you through the process.
If you’re ready to explore opportunities, you can browse businesses for sale across the US and start identifying targets that align with your goals.